It’s been said that love and money are often the two most wanted things in life. And every February, they unite to become a power couple.
On Feb. 14, millions will celebrate Valentine’s Day. Couples and courters will demonstrate their affection in a variety of ways — through candy, cards, flowers, dining experiences and gift exchanges.
That’s great for the heart. It’s also good for the economy.
According to the National Retail Federation, Valentine’s Day spending in the U.S. is expected to be $25.9 billion in 2023, based on a survey released by the organization. The federation estimates spending will be up by 8.4% compared to $23.9 billion in 2022. Arizona consumers are estimated to spend $520 million for Valentine’s Day this year. On average, households are expected to spend $193 this year, which also includes gifts for co-workers, children’s friends and teachers, and pets.
And with a new jobs report touting strong numbers (more than 500,000 new jobs) and low unemployment (3.4%), the near future is looking rosy, which might be a good time to buy a dozen roses.
ASU News spoke to Lee McPheters, a research professor and director of the JPMorgan Chase Economic Outlook Center in Arizona State University’s W. P. Carey School of Business, to discuss Valentine’s Day, trends in spending and who is spreading the love.
Question: Retailers expect Valentine’s Day spending to increase this year to a near record high, but meanwhile many economists think a recession is a possibility sometime in 2023. Why do you think spending would go up when there is so much uncertainty about the economy?
Answer: Yes, it is true that spending for holidays and celebration days takes a hit when the business cycle turns down, but many economic indicators are still strong right now. Probably most importantly, unemployment is still very low, and combined with the built-up savings from the pandemic, consumers feel this is a good time to spend on their spouse or somebody special.
The record for Valentine’s Day spending was $27.5 billion in February 2020, just before the pandemic hit, and that was the month when unemployment dipped to 3.5%, the lowest in decades. The lowest Valentine’s Day spending was at the bottom of the Great Recession, in 2010, when unemployment was stuck at nearly 10%.
Q: What trends do you see emerging in spending for Valentine’s Day?
A: The top spending categories are candy (57%), cards (40%), flowers (37%), an outing or other experience (32%), jewelry (21%), gift cards (20%) and clothing (19%). I don’t think that is going to change anytime soon. But this year, nearly a third of those who celebrate are planning to give a gift of some sort of experience, like dinner out, or a concert or some other activity, and that is a new all-time high.
Q: Why do you think that experiences are becoming a more popular gift?
A: Probably this is partly a response to the pandemic when outings were not as popular or just not possible. Also, the retail survey statistics show that it is young people who are driving this trend; about 40% of 18- to 24-year-olds gifting an experience.
Q: What demographic seems to be most into spending for Valentine’s Day? The Baby Boomers have the greatest wealth accumulation. Are they the top spenders?
A: Actually, it is the oldest members of the Millennial age group, those around age 35–44, who will be spending the most for Valentine’s Day.
Q: Are there any other trends you noted?
A: The main spending is for a spouse or significant other, but in the past couple of years we have seen more responders planning to spend on coworkers and spend more on their children’s friends. And according to the latest survey, about one third of people are now planning to spend on their pet as well, up by about 50% from just five years ago.
Q: What are you getting your loved one for Valentine’s Day this year?
A: As an economist, I am looking to maximize value with minimal cost, so I am going to be spending less than that $193 average. But after quite a few years of experience, I know that flowers are a winning choice, the more colorful the better. And for the fun element, a big heart-shaped balloon. Definitely must have the balloon.
